"The Sheresky plaintiffs allege that Morgan Stanley improperly lobbied the DOL in an 'ex parte process' for over a year ... They further allege that Morgan Stanley is impermissibly utilizing the Advisory Opinion in the arbitrations to argue that because the DOL's 'official position' is that the Program is not governed by ERISA, the financial advisors' claims are frivolous and must be dropped, and that Morgan Stanley will seek attorneys' fees if the arbitrations proceed." [Sheresky v. Chaves-DeRemer, No. 25-8935 (S.D.N.Y. complaint filed Oct. 28, 2025)] MORE >>
"Three former Morgan Stanley financial advisers ... [allege] the agency acted unlawfully when it issued an advisory opinion siding with Morgan Stanley about whether certain deferred compensation plans are protected under [ERISA]. The lawsuit ... claims the DOL's [Advisory Opinion 2025-03A] violated the Administrative Procedure Act and unfairly interfered with ongoing arbitration proceedings." [Sheresky v. Chaves-DeRemer, No. 25-8935 (S.D.N.Y. complaint filed Oct. 28, 2025)] MORE >>
"There are several arbitrations and even lawsuits over the Plan which Morgan has been defending for years. In those cases, the plaintiff-advisors maintain that the Plan is subject to ERISA and violates its minimum vesting rules. Morgan has been winning many arbitrations. However, in July the United States Court of Appeals for the Second Circuit held the Plan was subject to ERISA and the plaintiff's in the class action could go to arbitration with their claims.... The DOL's Advisory Opinion gives Morgan even more ammunition to defend the arbitrations and may even chill future claims." [Shafer v. Morgan Stanley, No. 24-3141 (2d Cir. Jul. 9, 2025).] MORE >>
"For wealth advisors and RIAs, the implications of this ongoing dispute extend beyond the legal maneuvers. Deferred compensation remains a powerful retention tool across the wirehouse and brokerage landscape ... If courts or regulators were to determine that such programs fall under ERISA, it could significantly alter how firms structure advisor pay, adding compliance burdens and limiting forfeiture provisions that firms rely on to retain talent." [DOL Advisory Opinion 2025-03A; O'Neill v. Morgan Stanley, No. 24-00358 (FINRA Aug. 8, 2025)] MORE >>
"The DOL's opinion, which was requested by Morgan Stanley outside counsel, comes on the heels of a string of arbitration victories for the firm in disputes over deferred compensation. Over the past two years, it has successfully defended at least five consecutive challenges, saving millions of dollars and further solidifying its stance that its plans are lawful and enforceable." MORE >>
"[In] the Department's view, the mere fact that the terms of the program contemplate limited situations where an award could be paid after termination of employment does not implicate a deferral of income of the kind contemplated by ERISA section 3(2)(A). Thus, the Department has no reason to believe that the deferred incentive compensation program is an employee benefit pension plan under ERISA section 3(2)(A) as a result of such surrounding circumstances." MORE >>
"Shortly before a reduction in force took effect, an employee was terminated for cause and informed that she was not eligible for benefits under the employer's ERISA-covered severance pay plan. Rather than file an appeal under the plan's claims procedures, the employee sued under state law ... [T]he First Circuit concluded that the employee had merely attempted an 'end run' around ERISA with allegations that she relied on misleading statements when not claiming benefits under plan procedures. But ERISA provides the exclusive cause of action in precisely such circumstances." [Orabona v. Santander Bank, N.A., No. 24-1905 (1st Cir. Jun. 16, 2025)] MORE >>
"A recent First Circuit decision ... illustrates how ERISA preemption of state law protects employers where a former employee asserts state law claims alleging improper termination of employment to avoid paying severance benefits. This post describes the benefits of ERISA preemption, provides an overview of the First Circuit decision, and highlights key aspects courts look to in determining whether a severance program is an ERISA plan." [Orabona v. Santander Bank, N.A., No. 24-1905 (1st Cir. Jun. 16, 2025)] MORE >>
"Morgan Stanley argued that the district court's commentary on the merits of the underlying ERISA claims rendered its order effectively a 'denial' of arbitration, and therefore appealable. The Second Circuit rejected this novel theory, citing the statute's plain language and declining to interpret a granted motion as a constructive denial.... Morgan Stanley separately sought a writ of mandamus ... to erase the district court's conclusion that the compensation plans were governed by ERISA. But the Second Circuit made clear that such relief is only available in extreme circumstances." [Shafer v. Morgan Stanley, No. 24-3141 (2d Cir. July 9, 2025; unpub.)] MORE >>
"[This article provides] answers to questions finance and HR leaders often ask about executive severance, including how to structure it at different growth stages, common mistakes to avoid, and how to stay competitive while meeting the expectations of the board and investors." MORE >>
"if severance is exempt from Section 409A, then: [1] The severance payments can be accelerated without penalty.... [2] The severance package may be able to be replaced with a new arrangement with different payment terms without a Section 409A 'substitution' risk ... [3] The six-month delay that applies to specified employees at public companies does not apply to exempt severance." MORE >>
"The Supreme Judicial Court’s (SJC) decision reversed a lower court’s ruling that had disrupted the long-held understanding that the MNAA categorically excludes nonsolicitation agreements, and it further clarified the scope of the MNAA’s reach.... [T]he Miele case remains a cautionary tale for employers when seeking to reaffirm restrictive covenants, a common practice when an employee resigns." [Miele v. Foundation Medicine, Inc., SJC?13697 (Mass. S.J.C. June 13, 2025)] MORE >>
"Under the proposed law, employers must: [1] Notify employees of their right to consult an attorney about the severance agreement; [2] Provide employees with a 'consideration period' to review the agreement, not less than 21 calendar days; and [3] Provide a seven-day revocation period following execution of the agreement, which would become effective only after the revocation period has expired." MORE >>
"The trial court found that a mistake had occurred -- but denied reformation.... To reform a contract, there must be proof of a mutual agreement to different terms before signing.... On appeal, the First Circuit didn't reach the reformation question.... Because both readings were plausible, the contract's meaning couldn't be resolved as a matter of law. The district court should have considered extrinsic evidence -- emails, discussions, or draft language -- before deciding who was right." [Dahua Techology USA, Inc. v. Zhang, No. 24-1350 (1st Cir. May 12, 2025)] MORE >>
"The Court engaged in careful statutory analysis of the employee's argument that the term 'competitive activities' in the definition of forfeiture for competition agreement is broader than the phrase 'certain specified activities competitive with' in the definition of noncompetition agreement. Finding it would render the statute internally contradictory, the Court rejected this argument." [Miele v. Foundation Medicine, Inc., SJC‑13697 (Mass. S.J.C. June 13, 2025)] MORE >>
"Following the merger, the surviving corporation, Microchip, announced that it would no longer honor a severance plan, that Atmel had adopted prior to the merger, for employees who were fired without cause. Two such former employees ... filed an ERISA class action lawsuit ... asserting that that Microchip further violated its fiduciary duties under ERISA by encouraging employees to sign the release of claims in exchange for significantly lower benefits than they were allegedly entitled to under the severance plan." [Schuman v. Microchip Technology Inc., Nos. 24-2624, 24-2978 (9th Cir. Jun. 5, 2025)] MORE >>
"This article discusses what constitutes an ERISA-governed executive severance plan, what an ERISA-governed severance plan requires from the plan administrator, and why you may want your plan to be governed by ERISA." MORE >>
"Done correctly, severance plans reduce employer exposure to employment law issues and help employees with a soft landing. Done incorrectly, what was intended to be a tool to ease tensions can result in heightened anxiety, mistrust, and litigation.... [1] ERISA plan vs. non-ERISA payroll practice ... [2] Who is covered ... [3] What situations are covered ... [4] Retain flexibility ... [5] Follow plan terms ... [6] Communicate with participants." MORE >>
"The New York State Senate passed the No Severance Ultimatums Act on March 4, 2025. If enacted, the Act would amend New York Labor Law to prohibit 'coercive ultimatums' in employment severance agreements and would require employers to give all New York employees time to review and revoke severance agreements." MORE >>
"[T]he Acting General Counsel of the [NLRB] recently rescinded, via Memorandum GC 25-05, more than 30 Biden Administration memoranda. Chief among the rescinded memoranda is the NLRB's 2023 guidance [Memorandum GC 23-05] regarding non-disparagement and confidentiality provisions included within non-managerial employees' severance agreements, which followed the NLRB's February 21, 2023 decision in McLaren Macomb." MORE >>
"[The No Severance Ultimatums Act (S 372) would require] employers to provide employees with at least 21 business days to review a separation agreement, and seven calendar days to revoke the separation agreement (meaning an agreement cannot become effective or enforceable until the revocation period has expired). While employees can voluntarily sign a separation agreement before the required consideration period expires, the revocation period is not waivable." MORE >>
"The employer maintained that the employee did not resign for Good Reason because his job duties essentially remained the same 'on paper,' and nothing in his job duties guaranteed a large- scale project.... The Court responded that if this argument was adopted, it would allow any employer to circumvent a severance plan's provisions by keeping an employee's job duties unchanged on paper while significantly reducing his actual responsibilities. The Court ruled that, in accordance with plan provisions, the only issue was the degree and extent of diminishment in the employee's actual duties." [Hoff v. Amended and Restated Anadarko Petroleum Corp. Change of Control Severance Plan, No. 23-1361 (10th Cir. Feb. 4, 2025)] MORE >>
"AEP contended, and the district court agreed, that the severance plan was a top hat plan.... the court agreed with the district court that the plan provided 'deferred compensation,' was not subject to ERISA's fiduciary rules, and thus the fiduciary exception to the attorney-client privilege did not apply." [Kramer v. American Elec. Power Exec. Severance Plan, No. 24-3174 (6th Cir. Feb. 10, 2025)] MORE >>
"This study aimed to estimate the net effects of pandemic-induced excess deaths on OASDI liabilities, utilizing dynamic microsimulation models, and examined how these effects vary across different socioeconomic and racial-ethnic groups.... The pandemic resulted in approximately 1.7 million excess deaths among individuals aged 25 and older between 2020 and 2023. These premature deaths reduced future retirement payments, which increased the Social Security fund by $294 billion. However, this gain was offset by reductions in future payroll tax flows ($58 billion) and increased payments to surviving spouses and children ($32 billion), resulting in a net impact of $205 billion." MORE >>
"The court's decision hinged on the interpretation of the severance plan's 'Good Reason' clause, which allowed for benefits if an employee's duties were 'materially and adversely diminished' after a change of control. The court applied de novo review, focusing on the factual differences in Hoff's responsibilities before and after the acquisition." [Hoff v. Amended and Restated Anadarko Petroleum Corp. Change of Control Severance Plan, No. 23-1361(10th Cir. Feb. 4, 2025)] MORE >>
